Retailers confront many issues when deciding what products to provide to stores. The issues can become even more daunting when the decision process additionally has to consider which types of a specific product a distributor should supply. For example, clothing products come in several different sizes. Determining what sizes in addition to what specific clothes to provide becomes problematic especially given the vast array of clothing options available to a retailer.
Retailers typically solve the problem of how much and what sizes of a product to provide among their various stores by looking at the product allocation decisions of the previous year, and then, they will make slight adjustments based on relatively simple analytics and/or intuition given the previous year's sales and performance. Retailers may also try to address this problem by analyzing revenue goals that have been set at a company level. They then decide how to best reach these goals—that is, they typically determine, among other things, how much of each product they should order (and sell) to meet these goals. Such approaches can lead to product assortments that are not aligned with consumer demands.